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Important Facts about Credit Reports and Credit Scores

So now that I know my Credit Score, what does it mean?

When evaluating a borrower for a mortgage loan, we look at all three credit bureaus (Experian, Transunion and Equifax). We call it a “Tri-Merge” report. The underwriter will use your middle credit score when evaluating your file for approval. For example, if you have a 720 score with Experian, a 745 score with Transunion and a 700 score with Equifax, we would use the 720 score. This is also the score that we use to determine interest rate pricing (the higher the score, the cheaper the rate).

Look up your middle credit score in the chart below:

Score Range

Credit Range

760 to 850

Excellent

700 to 759

Very Good

660 to 699

Good

620 to 659

Below Average

580 to 619

Poor

300 to 579

Very Poor

There are very few options available to those with credit scores below 580, but some programs are out there.

Components of a Credit Score

Your credit scores are calculated based on multiple factors. Here’s a great breakdown for you:

Factor

Approx % of Score

Payment History

35%

Balance to Credit Limit Ratio

30%

Length of Credit History

15%

Credit Mix

10%

New Credit

10%

Here are some common questions we are asked about credit reports:

Question

Answer

What is a soft credit inquiry?

When an existing creditor or marketing company runs your credit. Does not affect your credit scores.

What is a self-made credit inquiry?

When an individual requests their own credit report. Does not affect your credit scores.

What is a hard inquiry?

When creditors or lenders request your credit report to determine whether to extend new credit. This does negatively affect your credit scores.